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19 Sep 2013
Flash: Fed vrs MPC - Societe Generale
FXstreet.com (London) -Research teams at Societe Generale put the Fed and MPC in focus and explain the UK's position effecting Sterling.
Key Quotes:
"The contrast between the (very dovish) Fed and a more hawkish UK MPC is seeing gilts under-perform Treasuries and GBP/USD reach its best levels since the start of January".
"With higher inflation than the US, and with economic momentum picking up in contrast to weaker recent data in the US, the case for paying GBP and receiving dollars, as well as for buying GBP (I prefer longs in GBP/CHF and GBP/JPY in the long term) is pretty strong. The twist comes from this morning's UK data. Brian expects a 0.3% fall in ex-auto retail sales, taking y/y volume growth down to a (still solid) 2.8%. Bears watching, but the chances of the MPC hiking before the Fed have increased significantly".
Key Quotes:
"The contrast between the (very dovish) Fed and a more hawkish UK MPC is seeing gilts under-perform Treasuries and GBP/USD reach its best levels since the start of January".
"With higher inflation than the US, and with economic momentum picking up in contrast to weaker recent data in the US, the case for paying GBP and receiving dollars, as well as for buying GBP (I prefer longs in GBP/CHF and GBP/JPY in the long term) is pretty strong. The twist comes from this morning's UK data. Brian expects a 0.3% fall in ex-auto retail sales, taking y/y volume growth down to a (still solid) 2.8%. Bears watching, but the chances of the MPC hiking before the Fed have increased significantly".